Making Selections for Your

Custom Home

Stay Within Your Budget with Allowances

Allowances Keep Your Custom Home Budget Intact

Allowances are a key element in custom home budgeting. They provide an estimated cost for each element in a building project. We calculate allowances for each of our clients during the custom home design process.

Getting Started with Allowances

We start with sketches of your new home, review any photos you’ve collected for inspiration and talk about your vision and “must have” list. Working with a designer or architect, we then develop preliminary plans for the home. All of this input gives us a rough idea of the level of finishes, fixtures and amenities you want for your home.

The estimated cost of each of those elements is represented by an allowance. We compile all allowance and construction details onto a specification sheet. Then, we give you a binder with the spec sheet and a scaled-down version of your home plan so you can follow along during construction.

Before our custom home construction process begins, you will work with Laura Trapp, the selections coordinator at Hensley Custom Building Group, to choose specific materials as the project progresses. As you make choices, the allowances will be your guide to staying within your budget.

Example Allowances

Let’s take, for example, a ceramic tile flooring allowance. If you plan to have tile in certain places in your home, you’ll see an allowance for it on your home’s specification sheet. The allowance might note that tiles will be used for flooring in all full bathrooms, the laundry room and the mud room. The material allowance for these tiles could be $4 per square foot.

We’ll meet you at the tile showroom or provide you with sample tiles to choose from. If you fall in love with a tile for your master bath that costs $12 a square foot and want to stay within your budget, you’ll need to choose a tile priced lower than the allowance for other spaces. The mudroom, laundry or kids’ bathroom could be places to use less-expensive floor tiles. Based on the tiles you choose, the supplier will compile an estimate or bid for materials and labor.

Another example is a cabinetry allowance for the kitchen, bathrooms, bar or butler’s pantry. One of the first selection meetings you’ll have with us will be at the cabinetry showroom. Because we’ve already discussed your vision for your home and looked at inspiration photos, we’ve estimated what the cabinetry will cost and included an allowance in your specifications. Let’s say the allowance is $40,000.

You’ll look at available cabinet options and make choices with the help of our team and the showroom experts. The cabinet supplier then creates an estimate or bid for the job, based on your selections. You repeat this selection and bid collecting process for each element of the home--from bricks to plumbing fixtures, lighting to appliances, built-ins to glass shower doors, and so on. Sometimes you will visit showrooms, other times, meetings will be held at the construction site. The process is involved, but our experienced team is with you at every step.

Going Under and Over Allowances

Allowances are only estimates, not hard and fast costs. When you make selections, your actual bids will vary from the allowances. Let’s go back to that cabinetry example: If the bid for your cabinets comes in at $42,500 and your allowance was $40,000, you will need to pay for the overage when you sign the cabinetry contract.

If your tile allowance was for $4 a square foot and you came in just under, we will credit that amount to your final payment. When you sign a contract with us, you’ll see information on the amount of overages allowed as a percentage of the project’s total cost. When a client exceeds that percentage, we charge an additional 20 percent fee as a builder’s margin. These charges are standard to the custom home industry.

Contractors add a margin to the hard cost of a job to cover overhead and profit. Like every other business, our overhead expenses include things like offsite staff, marketing expenses, insurance and office costs. As selections coordinator, Laura Trapp tracks the details of every job closely, and will keep you up to date on your costs and budget. You can note any changes in your custom home binder and workbook.

Change Orders

All elements of your project are spelled out in the specifications, but not every element has an allowance. Based on your plan, we will order the necessary windows, for example. If, once that window order is placed, you decide to change a window for a sliding glass door, we charge you a change order fee.

To help avoid change orders, it’s best to take all the time you need to carefully review your plans in the design phase. Getting a perfect fit is the advantage of a custom home. So, if substituting a door for a window is best for you, a change order fee is a worthwhile investment.

Did we answer your questions about allowances?

Transparency is important to us at Hensley Custom Building Group. We’re happy to answer any questions on allowances or any other part of the custom home design or building process. Please give us a call or contact us through our website, we will get right back to you.